Stocks Down; Dean Foods Up, Abercrombie Plunges

By Sam Mamudi

The Dow Jones Industrial Average and the Standard & Poor’s 500 index are both falling this morning, down 0.6% and 0.8%, respectively.

Falling hard are shares of Abercrombie & Fitch (ANF), after the retailer missed expectations for first-quarter earnings and lowered its full-year outlook. Same-store sales fell 15% during the period.

There are stocks that are climbing this morning, among them Dean Foods (DF) and Intuitive Surgical (ISRG), both up about 4.5%.

Dean Foods’ rise comes after it said it had completed the spin off of WhiteWave Foods (WWAV). Stifel analyst Christopher Growe wrote this morning:

With the WhiteWave spinoff complete, we reiterate our Buy rating and establish a new target price of $12. This target price reflects a 6.7X EV/EBTIDA multiple on our 2013 estimate and a 6.4X multiple on our 2014 estimate. We see the deconsolidation of the company and the resulting strong growth potential as a near-term catalyst for the stock.

Intuitive Surgical stock is rising after it won a court case in Washington state:

Jurors in Port Orchard, Washington, reached their verdict yesterday by a 10-2 vote after a five-week trial. Intuitive owes no damages based on claims that the patient, Fred Taylor, and his family suffered due to the company’s inadequate training of the doctor who removed his prostate gland in 2008, according to the verdict.

The case was the first to go to trial of at least 26 lawsuits against Intuitive alleging injuries tied to its da Vinci robotic system, which was used in more than 300,000 U.S. operations last year.

Robots and related products generated most of Intuitive’s $2.2 billion in revenue in 2012. The robots, which are in more than 1,300 U.S. hospitals, cost $1.5 million each and were used in 367,000 U.S. procedures in 2012.

Also rising this morning are shares of Procter & Gamble (PG) as investors cheer the return of former CEO A.G. Lafley, who will take over from current chief Robert McDonald on July 1. As The Wall Street Journal reports:

With its Pampers diapers and Olay skin creams, P&G dominated the global consumer products market under Mr. Lafley. But the company, with $84 billion in sales and 126,000 employees, has since lost a step to rivals like Unilever UN +2.12% NV. Mr. McDonald spent the past year under scrutiny from his board and from investors concerned he wasn’t doing enough to pare down P&G’s bloated cost structure and deliver more consistent results.

After showing some improvement in recent quarters, Mr. McDonald stumbled in late April by reporting weak sales growth to start the year. By Thursday afternoon, Mr. McDonald was out of a job.

Bill Ackman has been vocal about P&G’s potential, but also for the need for better management performance; the investor welcomed today’s news. We wrote a bullish Take on Procter & Gamble (sub required) 10 days ago, with Dimitra Defotis writing:

With Ackman’s ability to shake up management and get the stock higher, P&G shares look attractive.

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